Open Position

The world looks and feels different according to how much one has at stake. 

In my line of work this can lead to unhealthy perceptual biases. One can try to train oneself out of them, but they linger, and there isn't really much one can do about that. 

Maybe a month ago Vladimir Putin might have eased up on amassing his forces at various points around Ukraine if some sort of strongish commitment to permanently postpone that nation's eligibility to join NATO had been made. But the western alliance played an odd version of hardball and softball at the same time and that surely tempted Vlad to go all in. 

He now has the kind of substantial open position that I recognise. He will know what he could potentially gain but he will also have a stop position behind him, and this will not be all the way back to the 2021 status quo and the Minsk Accords. We have surely gone beyond the point where he will simply recall half the Russian army to its barracks.

What might Putin's 'stop' be? He knows this is an important year in the US electoral cycle so making Biden look weak and ineffectual will be a must.* Exposing some serious faultlines in western unity, a nice to have. 

I now believe that he will not stand down before the independent status of the breakaway zones like the Donetsk People's Republic has been firmed up. Some permanent new lines on the map. 

He may not move directly on Kiev, at least not immediately. The brigades in Belarus are multifunctional, allowing him to split the Ukranian army's attention, implicitly threaten NATO members along the Baltic and keep the idiot in charge of that other ex-Soviet neighbour in line. 

When Putin was just two years old the US sponsored a coup here in Guatemala which removed a legitimate democratically-elected government. Two years later the USSR sent tanks into Budapest. This was the world the Russian President grew up in and which he appears reluctant to consign to the history books. Being the last man stuck in that milieu possibly comes with some advantages. 

World leaders would appear to be playing a game of 3D chess where not all the key players are moving their pieces on the same levels of the board. 

Putin, for better or worse, has access to the most multi-dimensional perspective, encompassing the present strategic realities, history, myth, economic channels, comfy retirement, ethnic demarcations and so on. 

He knows that whilst westerners will don their retro WWII or Cold War specs at a moment's notice, in general they are now more comfortable arguing over pronouns and more localised controversies than actually responding to the global threats to their more essential interests in the manner of their grandparents. 

On a slightly, but not entirely separate note. I am no trained economist, but when the inflation first started to bite in the early part of last year even I could see clearly that it wasn't going to be 'transitory'. So when I heard the Fed making all those reassurances I concluded that either they are lying or they are incompetent. 

However, the mendacity option has a small caveat. Back in June 2021 we had emerged from the winter surge of covid in the north, but Delta was threatening and the central bankers were all probably aware that it might be too soon to tighten up fiscally. In the US the Fed kept up with the bond purchases and stimulating the economy, presumably in the hope that they'd have a chance to dampen inflation in 2022 when the covid threat had eased. 

In effect they had been staring at the same charts for so long and gambled that the pandemic would relent favourably rather than being topped off by a rapidly-escalating geopolitical predicament. 

Along came Omicron which created a small dent in the recovery. It also demonstrated that 'soaring' inflation really had to be a supply-side issue. And this raises the question — which again, even I could see coming — of whether hiking interest rates is really going to help all that much. Down here in Latin America, it hasn't. 

Back to Putin. He's been listening to Biden saying that the Americans won't respond militarily to any invasion of Ukraine, but instead come at Vlad and gang all guns blazing economically, and he must have had indulged in a chuckle or two. 

High levels of inflation and indebtedness (and wobbly corporate asset markets) mean that this could be precisely the wrong moment to pull a few levers to see what happens. 

* A subset of British analysts seem to think Putin can possibly achieve this by doing nothing — making POTUS cry wolf multiple times and then mock him when nothing actually happens. 

This would be a variant of something I long ago suspected the CIA were doing in the early days of the mainstream Web and USENET: seeding the digital media with stories that sounded like obvious conspiracy bunk in order to camouflage the outrageous stuff that was really happening in parallel areas.  

By inciting Biden to constantly declare the imminence of his invasion, Vlad could be hoping to make it harder for the West and its media to respond as vehemently and coherently as they might when it finally does occur.